Southwest Ends an Era While American Begins a New One

Living in Dallas i really have no choice but to fly AA. I have put up with a lot of crap from this airline and this baggage charge is the LAST straw. I want the AA execs to know that from now on I will do ANYTHING to avoid flying your airline. I will go over to Love Field and fly SWA and happily make a stop to get to where I am going.

And as a share holder I have a message to Mr. Arpey…You have lost my confidence in your ability to run the airline. I now have no problem voting to fire you.

btw, Brilliant Monty tie-in…very funny.

Why are U.S. airlines so averse to European-style revenue generation–things such as logo planes, selling ad space on overhead bins, charging for priority boarding (obviously, Southwest has implemented a version of this system), cutting back on creature comforts. The Euro airlines also charge for bags, granted, but their fares are also low enough to justify it.

Is it that U.S. consumers are too fickle or picky, or does it have something to do with the regulation system here? It just seems odd that you can pay ~$125-200 r/t from Dublin-Athens or Stanstead-Barcelona, while the same distance trips within North America cost twice that. It’s no secret.

Thanks for the informative reply. Sounds like it’s a matter of segment length coupled with the fairly high expectations of the American consumer.

AN – Parking airplanes, scrapping ‘em then making beer cans out of them. At least I think that’s what means. I don’t want to put words in CF’s mouth. Please correct if I am wrong.

Wow man – I was ready to puke when I read that AA was going to do the first bag charge. I always had an inkling it would come to this, just not so soon. As to Zach’s query, I think one reason why the European low-cost model has only seen modest success here in the States is that consumers like myself PREFER one-price bundles that encompass everything I will need. (By the way, I don’t consider Southwest as similar to a European definition of low-cost airline). Think the Cable/Internet/Phone bundles or the Wireless packages with text, etc. When I was flying back and forth to St. Maarten, I always chose AA over Spirit, even though Spirit was sometimes $80-$100 cheaper, because I appreciated the convenience of knowing that I paid a set amount that would cover certain expected usages – like baggage. I didn’t have to worry about having $2 in my wallet for water or trying to figure out how much more I would pay for checking bags, etc. It really is a convenience thing.

That being said, I really REALLY wish Airlines would do things like sell advertising space on, in, under, around, ANYWHERE on the plane in order to raise more revenue. I mean, they could make a very pretty penny with all that advertising space, without nickel and diming their passengers. I completely understand that rising fuel prices require creativity and some tough decisions – and I also completely understand and agree that fares need to increase. I wish airlines would just DO THAT (modestly raise fares to cover costs) instead of ruining their products whilst simultaneously charging for everything.

Going back to regulation or not, the only way I see the airlines surviving with current fuel prices is going back to high fares, regulated or not.
Growing up I was one of the only kids in grade school that had ever flown on commercial aircraft. Most of my classmates parents hadn’t ever flown. Even after de-regulation in the 1980′s most of my friends weren’t jet setting anywhere. It was leisure travel for the wealthy and for business. People didn’t spring break in Mexico, a trip to Europe was once in a lifetime, family vacations were by station wagon. I didn’t notice air travel become the default means of transportation for all classes until the 1990′s.
I contend that the past 20-25 years have been a temporary reality in the face of de-regulation and cheap energy. I fully expect that someone born today will grow up much like I did, where the few, not the majority, were air travelers.

David,

I’m with you in that I would much rather pay for no frills and truly receive no frills. Plastic seats are fine if that’s what I pay for. Then again, we’re probably the exception to the rule. In today’s climate, $250 for a $1,600-mile roundtrip (roughly Chicago-Vegas) is still highly reasonable. That being said, I understand that Ryanair and Easyjet offer far less than even the stingiest North American carriers while increasing inconvenience to the traveler in terms of the far-afield airports and expensive bag check fees. For whatever reason, I usually end up in Europe about once a year, and I usually travel by train. Last year, the one time I flew Ryanair, it was between DUB-EDI, and the roundtrip cost me $60. Granted, that’s a 45-minute hop, and Chicago-Indianapolis, for instance (roughly the same distance), costs at least $107 with a 3-month advance purchase.

Artie,

I think you make a strong case for why the Ryanair model has failed to catch on in the US, but just to clarify: I didn’t mean to infer that Southwest follows the Ryanair model. I was just mentioning that they’ve begun charging for priority boarding, much like Ryanair does.

Artie wrote: “That being said, I really REALLY wish Airlines would do things like sell advertising space on, in, under, around, ANYWHERE on the plane in order to raise more revenue.”

Yet people criticized America West and US Airways for putting ads on the tray tables. I’ve flown a few times and it doesn’t bother me. As the ad is on the surface of the table, you don’t see it unless the tray table is down, and if the tray table is down you probably have something on top of it anyway.

I seriously doubt that charging $15 to check a bag is going to have much of a positive financial impact for AA in this climate. Most of the US carriers have spent years focusing on bean counting rather than delivering customers what they want, a good service experience. Each time they start charging for something, they fail to take the opportunity to improve the experience. Take food as an example. Rather than taking a look at food and get creative with ways to get people to spend more on the plane, they just stock up the galley with junk which you will only touch if you are absolutely desperate. This industry seriously needs a shake up, starting with removing the limit on foreign airlines taking a controlling stake in US carriers. Remove the competitive barriers and let the market decide what it wants.

I agree totally that we don’t need cheaper fares but I don’t see start-ups as providing true competition in these market conditions, they just can’t get scale. By removing foreign ownership rules, this will allow consolidation and by generating scale allow greater efficiency and ultimately profitability. The Open Skies deal struck by the EU and US is under threat if this doesn’t happen, so it will be interesting to see what transpires in the next couple of years.

Raise fares???

The Avg two hour flight needs about $50-60 per pax to cover gas these days. The Avg Transcon needs about $110 per pax.

So, to cover all other costs, pay for the pilot contracts, and make a little bit to appease investors and to internally reinvest in the product, the two hr flight needs to price out over $200. The Transcon over $350.

So let’s see….CHI-HOU’s cheapest price is $119 and LAX-BWI is at $99.

this is a problem….this is not modestly raising fares.

I guess there is the other option – carry less baggage.

I suppose winter flights and business flights mean people have a bulk of clothing to carry.

However, I never cease to be amazed by the size of luggage that some people carry.

Summer holiday travel should easily be able to be limited to cabin baggage.

I know that it is a matter of opinion what people should take – but when people take half their stuff ‘just in case’ they need it, and they are going to places where they could buy the stuff ‘if they ever need it’ and then they cart the stuff back cos ‘they didn’t need it after all’ I scratch my head.

When you work out that you could save twenty pounds per passenger times say one hundred – that’s a ton of payload not carried – and a lot of fuel also not needed to be used or carried.

Jetstar’s way around it is a great idea. Its unbundling but in a way that is positive for the customer not negative.

Now the problem in the US comes down to would the GDSs as they’re constituted now support this? I’m no expert on them but I’d say no, at least not clearly. You’d have to have some fare class that doesn’t include it. However almost nobody reads the fine print on their fare class, and getting all of the various sellers to support it would be tough.

Now if the airlines could selectively release those fares to sellers that support that (Or even better, just sell them on their website.) this would be a boon.

Not that I fly AA very often, if ever, but I know that they won’t be the only carrier to adopt the $15 first bag fee. I completely understand they’re under the gun with the sharp increase in fuel costs, but ignorance is bliss. Don’t nickel and dime me, just add it to the cost of the fare.

I think the scenarios the CF listed in the initial post are all likely possibilities due to this new fee. If it was just included in the fare we wouldn’t have to worry about running out of overhead space, fights around gate-checked baggage, longer lines at TSA, etc., etc.

I’m crossing my fingers that either (a) AA realizes how poor an idea this is and rescinds the fee and/or (b) none of the others follow suit.

-MJT